Gold After The Fed, There is Comfort in Conflict

Gold After The Fed, There is Comfort in Conflict

$GLD $XAU

 FLASH: Gold Bugs are betting there is more to the precious Yellow metal’s rally than interest rates.

Gold is on its way to a 3rd straight monthly gainer, trading near 6-year highs as central banks signal easier monetary policy.

The Fed is expected to cut U.S. interest rates by a Quarter point Wednesday. Gold analysts and traders are looking for affirmation from Fed Chairman Powell that more reductions ahead.

  • Spot gold trading at $1,429 oz just hours ahead of the Fed’s decision.

Gold is benefiting as signs of slowing economies, and there are signs that things could get worse before they get better.

The International Monetary Fund (IMF) further reduced its outlook, already the lowest since the Y 2008 financial crisis, saying the projected pickup in Y 2020 is “precarious.”

Singapore may underscore the IMF’s case, with economic data deteriorating in the export-reliant country, raising the risk of a recession in the former leading Tiger economy.

And Societe Generale SA says bullion provides a bulwark against a recession next year sparked by trade disputes and a slump in corporate-profit growth.

FACT: Economies worldwide are under continued strain from slowing industrial demand. China’s purchasing managers’ index on Wednesday remained in contractionary territory as pressures on exporters persist. A similar gauge in Europe slipped last week, driven by shrinking factory output in Germany and France.

Gold in June posted the biggest monthly gainer since the UK voted to leave the EU 3 years ago, and lots of other potential trouble spots are now adding to the global acrimony, keeping investors awake at night. Those include unrest in Hong Kong, tensions over the Strait of Hormuz, and global trade frictions showing signs of spreading beyond the Trump-China dust-up.

And gold’s gains have come on the strength of the USD, which can often diminish the appeal of the precious Yellow metal.

That is because there’s a high level of uncertainty. There are many improbable’s that a lot of the market cannot come to grips with, so increasing portfolio gold holdings is the prudent thing to do because it is one of the few assets you can buy that is liquid and is not based on anyone else’s credit.

Billionaire investor Ray Dalio, the founder of Bridgewater Associates, said in a LinkedIn post that he sees a “paradigm shift’’ in investing coming in the next few years.

Assets “that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold,” Mr. Dalio said in the post.

Not all investors are convinced gold’s rally will hold after the Fed’s decision Wednesday. We wait, We see, and take what the market gives.

Gold is an asset the the world’s central banks are buying.

HeffX-LTN’s overall technical outlook for GLD is Bullish too Very Bullish in here, all of our Key indicators are flashing Very Bullish.

Stay tuned…


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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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